CITATION: R.C. v. J.B., 2015 ONSC 3904
COURT FILE NO.: FS-12-118-00
DATE: 20150617
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
R.C.
Mr. Timothy Flannery, for the Applicant
Applicant
- and -
J.B.
Mr. Stephen Arnold, for the Respondent
Respondent
HEARD: June 16, 2015
REASONS FOR DECISION ON COSTS
Conlan J.
I. INTRODUCTION
[1] After a five to six day trial, in Reasons for Judgment reported at 2015 ONSC 2589, I resolved the issue at the first stage of this bifurcated proceeding – the validity of the “separation agreement” entered into by the parties. The “agreement” was set aside in its entirety.
[2] I indicated at the time that R.C. (the husband), as the successful party who wanted the “agreement” to be set aside, would normally be entitled to his costs. I invited the parties to settle the issue of costs. They have been unable to do so, thus, a brief teleconference was held on June 16, 2015 to deal with that issue. I heard submissions from both counsel.
[3] R.C. filed a Bill of Costs, supporting time dockets and an Offer to Settle dated April 6, 2015 (which Offer included terms that the “agreement” be set aside and that each party pay his/her own costs). J.B. (the wife) filed an Offer to Settle, redacted, dated April 7, 2015.
[4] R.C.’s Bill of Costs claims fees of $76,953.00 (including tax) on a substantial indemnity basis, or fees of $57,579.31 (including tax) on a partial indemnity scale, plus 11,251.72 (including tax) for disbursements. Counsel for the husband has 28 years of experience and charges an hourly rate of $250.00.
II. THE POSITIONS OF THE PARTIES
The Husband
[5] R.C. requests an award of costs in his favour in the all-inclusive amount of $60,000.00 (actually less than the total partial indemnity figure reflected in the Bill of Costs, including disbursements). He submits that the result after the first stage of the trial was, for him, equal to or better than what he offered to settle the matter for.
The Wife
[6] J.B. submits that any award of costs in favour of R.C. ought to be limited to partial indemnity recovery in the range of $11,000.00, total. She asserts that the husband’s settlement offer does not attract full recovery of costs in his favour. In addition, the wife submits that the fees and disbursements being claimed are excessive (such as for correspondence, research, trial preparation and travel-related disbursements). Also, J.B. argues that costs ought to be limited to the April 2015 trial itself, including preparation for that (and excluding, for example, legal work that relates to equalization of property issues). Finally, it is submitted by the wife that she has a very limited ability to pay costs.
III. ANALYSIS and CONCLUSION
[7] Costs shall be decided promptly after each step in the case – subrule 24(10) of the Family Law Rules (“Rules”).
[8] I have considered subrules 18(14), (15) and (16). Those provisions are as follows.
Costs Consequences of Failure to Accept Offer
(14) A party who makes an offer is, unless the court orders otherwise, entitled to costs to the date the offer was served and full recovery of costs from that date, if the following conditions are met:
If the offer relates to a motion, it is made at least one day before the motion date.
If the offer relates to a trial or the hearing of a step other than a motion, it is made at least seven days before the trial or hearing date.
The offer does not expire and is not withdrawn before the hearing starts.
The offer is not accepted.
The party who made the offer obtains an order that is as favourable as or more favourable than the offer. O. Reg. 114/99, r. 18 (14).
Costs Consequences – Burden of Proof
(15) The burden of proving that the order is as favourable as or more favourable than the offer to settle is on the party who claims the benefit of subrule (14). O. Reg. 114/99, r. 18 (15).
Costs – Discretion of Court
(16) When the court exercises its discretion over costs, it may take into account any written offer to settle, the date it was made and its terms, even if subrule (14) does not apply. O. Reg. 114/99, r. 18 (16).
[9] I have considered subrules 24(1), (5) and (11) of the Rules. Those provisions are as follows.
Rule 24: Costs
Successful Party Presumed Entitled to Costs
- (1) There is a presumption that a successful party is entitled to the costs of a motion, enforcement, case or appeal. O. Reg. 114/99, r. 24 (1).
Decision on Reasonableness
(5) In deciding whether a party has behaved reasonably or unreasonably, the court shall examine,
(a) the party’s behaviour in relation to the issues from the time they arose, including whether the party made an offer to settle;
(b) the reasonableness of any offer the party made; and
(c) any offer the party withdrew or failed to accept. O. Reg. 114/99, r. 24 (5).
Factors in Costs
(11) A person setting the amount of costs shall consider,
(a) the importance, complexity or difficulty of the issues;
(b) the reasonableness or unreasonableness of each party’s behaviour in the case;
(c) the lawyer’s rates;
(d) the time properly spent on the case, including conversations between the lawyer and the party or witnesses, drafting documents and correspondence, attempts to settle, preparation, hearing, argument, and preparation and signature of the order;
(e) expenses properly paid or payable; and
(f) any other relevant matter. O. Reg. 114/99, r. 24 (11).
[10] Generally, the other items in Rule 24 are not applicable here. For example, this is not a case of divided success. This is not a case where the successful party, R.C., behaved unreasonably. This is not a case where a party acted in bad faith or where costs were caused by the fault of one of the parties or counsel.
[11] A relevant consideration in deciding whether to not strictly apply subrule 18(14) is the financial condition of the parties. M.(A.C.) v. M.(D.), 2003 CanLII 18880 (ON CA), [2003] O.J. No. 3707 (C.A.).
[12] There are three fundamental purposes of a costs award: (i) to partially indemnify the successful litigant, (ii) to encourage settlement, and (iii) to discourage and sanction inappropriate behaviour by a litigant. Quantum of costs is discretionary. The Court must consider what is a fair, reasonable and just amount taking into consideration all of the circumstances including the reasonable expectations of the losing side. Serra v. Serra, 2009 ONCA 395, [2009] O.J. No. 1905 (C.A.).
[13] No argument could reasonably be made that the husband is not entitled to some costs. He was entirely successful at the first stage of the trial. There is no good reason to displace the normal presumption that R.C. is, therefore, entitled to costs.
[14] No complaint could reasonably be made about the hourly rate or time dockets of the husband’s counsel. The issue of the validity of the “separation agreement” was very important to the parties. The case was fairly and very competently presented by Mr. Flannery. With his level of experience, $250.00 per hour is a bargain. And, contrary to the submissions made on behalf of J.B., I find that the hours spent on the file by Mr. Flannery’s office, at least since January 2015, were reasonable, and that the disbursements charged were reasonable and properly recoverable.
[15] I accept, however, two of the arguments advanced by Mr. Arnold, counsel for the wife.
[16] First, I agree that I ought to confine the costs award to fees and disbursements that are readily identifiable as being connected to the first stage of the trial, without prejudice to R.C. being able to ask for the other costs at some later time.
[17] Thus, I am limiting the within costs award to Mr. Flannery’s account dated February 10, 2015 and afterwards. Those accounts, on the face of them, clearly relate to the first stage of the trial and the validity of the “separation agreement”.
[18] Second, I agree with Mr. Arnold that R.C.’s Offer to Settle, not having been made at least seven days before the start of the trial in April 2015, does not strictly fall within subrule 18(14).
[19] Under subrule 18(16), however, I have still considered that Offer. It was very reasonable. And, largely speaking, R.C. did as good or better after the first stage of the trial than what he had offered to settle for.
[20] Mr. Flannery’s accounts dated February 2015 and afterwards are for $555.76 and $33,474.96, both figures all-inclusive, for a total of $34,030.72.
[21] In my view, having regard to all of the circumstances including the wife’s ability to pay, a fair, just and reasonable amount of costs to award to R.C. is $22,000.00, all-inclusive. That is slightly less than two-thirds of what would be full recovery of costs claimed in the two accounts mentioned.
[22] Whether that quantum of costs amounts to partial or substantial indemnity is less important than a conclusion that the said amount meets the objectives of a proper costs award, which conclusion I draw. It is certainly an amount that the wife ought to have reasonably expected to pay if she was unsuccessful at the first stage of the trial.
[23] An assessment of costs that pre-date February 2015 (and those which post-date the two accounts mentioned above) will have to be determined at a later date, at which time the Court will know more about the relative degrees of success enjoyed by the parties on the equalization of property issues.
[24] For all of the foregoing reasons, within thirty days of June 17, 2015, J.B. shall pay to R.C. costs in the total, all-inclusive amount of $22,000.00. So ordered.
Conlan J.
Released: June 17, 2015
CITATION: R.C. v. J.B., 2015 ONSC 3904
COURT FILE NO.: FS-12-118-00
DATE: 20150617
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
R.C.
Applicant
- and -
J.B.
Respondent
REASONS FOR DECISION ON COSTS
Conlan J.
Released: June 17, 2015